The First Bancshares, Inc. : Announces the Acquisition of Sunshine Financial, Inc.


The First Bancshares, Inc. (NASDAQ: FBMS) (“First Bancshares” or “the
Company”), holding company for The First, A National Banking Association
(“The First”), announced today the signing of an Agreement and Plan of
Merger with Sunshine Financial, Inc. (“Sunshine”), parent company of
Sunshine Community Bank, under which First Bancshares has agreed to
acquire 100% of the common stock of Sunshine in a combined stock and
cash transaction.

Under the terms of the Agreement and Plan of Merger, each Sunshine
shareholder will have the option to receive either $27.00 in cash or
0.93 of a share of First Bancshares’ common stock in exchange for each
share of Sunshine common stock, subject to customary pro-ration and
reallocation procedures, so that 75% of Sunshine shares will receive the
stock consideration and 25% will receive the cash consideration. The
aggregate consideration is valued at approximately $32.1 million, based
on 1,027,599 Sunshine common shares outstanding, 80,000 Sunshine in-the
money options and FBMS’ stock price of $33.35 per share as of December
6, 2017.

At September 30, 2017, Sunshine had approximately $194 million in
assets, $161 million in loans, $142 million in deposits and $22.2
million in stockholder’s equity. Sunshine Community Bank serves Leon
County, Florida, through 5 locations operating in Tallahassee. The
transaction will expand The First’s footprint in the Florida panhandle,
including its entry into the Tallahassee market.

The Agreement and Plan of Merger has been approved by the Boards of
Directors of First Bancshares and Sunshine. The closing of the
transaction, which is expected to occur in the second quarter of 2018,
is subject to customary conditions, including regulatory approval and
approval by the shareholders of Sunshine.

Louis O. Davis, Jr., President and Chief Executive Officer of Sunshine,
commented, “We are very happy to join First Bancshares and believe this
combination will provide significant value to our shareholders, clients
and employees. We also believe this is a natural fit which increases
lending capabilities, expands capital resources and provides a more
expansive product offering to the Tallahassee business community.”


Keefe, Bruyette and Woods, Inc. served as financial advisor to First
Bancshares, and Alston & Bird LLP served as its legal advisor. Banks
Street Partners, LLC served as financial advisor to Sunshine and Silver,
Freedman, Taff & Tiernan LLP served as its legal advisor.

Combined Company

Upon completion of all transactions, including First Bancshares pending
acquisition of Southwest Banc Shares, Inc., the combined Company will
have approximately $2.4 billion in total assets, $2.0 billion in total
deposits and $1.6 billion in total loans. The Company will have 63
locations in Mississippi, Louisiana, Alabama, and Florida.

M. Ray “Hoppy” Cole, President & Chief Executive Officer of First
Bancshares and The First, commented, “We are excited and look forward to
welcoming the clients and employees of Sunshine to our team. Sunshine is
well known in Tallahassee as a customer focused organization that
delivers exemplary service. These attributes align perfectly with our
commitment to service at The First.

“The combination of our companies will provide increased capacity with
expanded product lines to better serve our existing clients and
aggressively pursue new relationships.

“Tallahassee is a growing market which is a natural extension of our
strategic vision to build market share in the Florida panhandle and a
continuation of our plan to build a regional community bank in the Gulf

“We welcome those Sunshine shareholders who will become shareholders of
First Bancshares. Local ownership is an integral part of our community
bank model. Our Company will continue to be focused on safe, sound,
profitable growth and will look for opportunities to enhance shareholder

Conference Call

First Bancshares will host a conference call for analysts and investors
on Thursday, December 7, 2017 at 10:30 a.m. CT to discuss the
transaction with Sunshine, as well as First Bancshares’ pending
acquisition of Southwest Banc Shares, Inc. and its recent capital raise.
The call can be accessed by dialing (866) 341-8906 (toll free) or (706)
758-0262 (international) and by identifying the conference ID number
3377939. For those unable to listen to the conference call live, a
recording of the conference call will be available from approximately
1:30 p.m. CT December 7, 2017 through December 14, 2017 by dialing (855)
859-2056 or (404) 537-3406 and by identifying the conference ID number

Additionally, an investor presentation summarizing the transaction,
including key operating assumptions, is available on FBMS’s website at
under investor relations.

About The First Bancshares, Inc.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi,
is the parent company of The First, A National Banking Association.
Founded in 1996, the First has operations in Mississippi, Louisiana,
Alabama and Florida. The Company’s stock is traded on NASDAQ Global
Market under the symbol FBMS. Information is available on the Company’s

About Sunshine Financial, Inc.

Sunshine Financial, Inc. is the holding company of Sunshine Community
Bank, a community savings bank with five branch locations in
Tallahassee, Florida. Sunshine’s stock is traded on the OTCPink under
the symbol SSNF. Additional information is available on Sunshine
Community Bank’s website:

Forward Looking Statement

This news release contains “forward-looking statements” as defined in
the Private Securities Litigation Reform Act of 1995. In general,
forward-looking statements usually use words such as “may,” “believe,”
“expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,”
“predict,” “continue” and “potential” or the negative of these terms or
other comparable terminology, including statements related to the
expected timing of the closing of the Merger, the expected returns and
other benefits of the Merger, to shareholders, expected improvement in
operating efficiency resulting from the Merger, estimated expense
reductions resulting from the transactions and the timing of achievement
of such reductions, the impact on and timing of the recovery of the
impact on tangible book value, and the effect of the Merger on the
Company’s capital ratios. Forward-looking statements represent
management’s beliefs, based upon information available at the time the
statements are made, with regard to the matters addressed; they are not
guarantees of future performance. Forward-looking statements are subject
to numerous assumptions, risks and uncertainties that change over time
and could cause actual results or financial condition to differ
materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but
are not limited to (1) the risk that the cost savings and any revenue
synergies from the Merger may not be realized or take longer than
anticipated to be realized, (2) disruption from the Merger with
customers, suppliers, employee or other business partners relationships,
(3) the occurrence of any event, change or other circumstances that
could give rise to the termination of the Merger Agreement, (4) the risk
of successful integration of Sunshine’s business into the Company, (5)
the failure to obtain the necessary approvals by the shareholders of
Sunshine, (6) the amount of the costs, fees, expenses and charges
related to the Merger, (7) the ability by the Company to obtain required
governmental approvals of the Merger, (8) reputational risk and the
reaction of each of the companies’ customers, suppliers, employees or
other business partners to the Merger, (9) the failure of the closing
conditions in the Merger Agreement to be satisfied, or any unexpected
delay in closing of the Merger, (10) the risk that the integration of
Sunshine’s operations into the operations of the Company will be
materially delayed or will be more costly or difficult than expected,
(11) the possibility that the Merger may be more expensive to complete
than anticipated, including as a result of unexpected factors or events,
(12) the dilution caused by the Company’s issuance of additional shares
of its common stock in the merger transaction, and (13) general
competitive, economic, political and market conditions. Additional
factors which could affect the forward looking statements can be found
in the cautionary language included under the headings “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and “Risk Factors” in the Company’s Annual Reports on Form
10-K for the year ended December 31, 2016, under the heading
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in Sunshine’s Annual Reports on Form 10-K for the year
ended December 31, 2016, and other documents subsequently filed by the
Company and Sunshine with the SEC. Consequently, no forward-looking
statement can be guaranteed. Neither the Company nor Sunshine undertakes
any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. For
any forward-looking statements made in this new release or any related
documents, the Company and Sunshine claim protection of the safe harbor
for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.

Additional Information About the Merger and Where to Find It

In connection with the proposed Merger, the Company will file with the
Securities and Exchange Commission (the “SEC”) a registration statement
on Form S-4 that will include a proxy statement of Sunshine and a
prospectus of the Company, as well as other relevant documents
concerning the proposed transaction. This communication does not
constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval. WE URGE INVESTORS
proxy statement/prospectus will be sent to the shareholders of Sunshine
seeking the required shareholder approvals. Investors and security
holders will be able to obtain free copies of the registration statement
on Form S-4 and the related proxy statement/prospectus, when filed, as
well as other documents filed with the SEC by the Company and Sunshine
through the web site maintained by the SEC at
Documents filed with the SEC by the Company will also be available free
of charge by directing a written request to The First Bancshares, Inc.,
6480 U.S. Highway 98 West, Hattiesburg, Mississippi 39402 Attn: Chandra
Kidd. The Company’s telephone number is (601) 268-8998. Documents filed
with the SEC by Sunshine will also be available free of charge by
directing a written request to Sunshine Financial, Inc., 1400 East Park
Avenue, Tallahassee, Florida 32301, Attn: Brian Baggett. Sunshine’s
telephone number is (850) 219-7200.

Participants in the Transaction

The Company, Sunshine and certain of their respective directors and
executive officers may be deemed to be participants in the solicitation
of proxies from the shareholders of Sunshine in connection with the
proposed transaction. Information about these participants may be found
in the definitive proxy statement of the Company filed with the SEC on
April 12, 2017 and the definitive proxy statement of Sunshine filed with
the SEC on April 18, 2017. Additional information regarding the
interests of these participants will also be included in the proxy
statement/prospectus regarding the proposed transaction when it becomes
available. The definitive proxy statement can be obtained free of
charge from the sources described above.